Three Companies Bag 2.1b Br Wheat Deal

The suppliers will be using Ethiopian Shipping Lines to transport the grain

The Ethiopian Government has chosen the companies it wants to supply 400,000 tons of wheat export into the country to stabilise the local market. The 2.1 billion Br award was won by three companies: Promising International Trading Co. DMCC, ADM International, and Phoenix Commodities DMCC.

About 11 companies submitted their proposals to the Public Procurement & Property Disposal Service. However, only 10 were opened. Al-Kawo Trading was declared a late bidder and its proposal was not opened.

The required 400,000tn of wheat was split into three lots. The first two lots were 133,334tn and the third was 133,332tn.

Promising, ADM and Phoenix won the first, second and third lots, respectively.

In a letter issued on February 16, 2017 the government announced that the three companies had won the bid with total offers of 90.7 million dollars. Promising, a UAE based company, took the first lot with an offer of 30.4 million dollars. ADM, an American company, won its lot with a 30.3 million dollar offer. Phoenix won the final lot with an offer of 30.01 million dollars.

The tender for the bid was initially floated last month on behalf of the Ministry of Trade. At the time, the plan was to purchase 720,000tn of wheat.

“The volume was downsized by 300,000tn after the revision of the first assessment of the national demand,” Yigezu Daba, director of the Service told Fortune. “The earlier amount was much higher than the national demand.”

Phoenix, the UK based company, listed an offer of 225.10 dollars per ton during the bidding, almost one million dollars less than the total offers made for the other two lots. At the time, Phoenix submitted a security bond of 8,000 dollars in Phoenix’s name, and an 80,000 Br CPO under the agent’s name. Each bidder was required to submit an 80,000 Br security bond for each lot.

All bid winners are expected to ship the grain through the Ethiopian Shipping & Logistic Services Enterprise.

The award notification letter signed by the Service’s Director General stated that the suppliers are expected to sign their contracts within seven business days. This is not the first time that the Ethiopian government has purchased bulk amounts of wheat for the purposes of market stabilisation. Between 2011/12 and 2012/13, the country imported 14.8 million quintals of wheat. A year ago, about six million quintals of wheat were purchased by the government with the same rationale of stabilising the market.

After the current procurement of wheat is delivered, it will be distributed to more than 300 flour factories and 5,000 bakeries.

The purchase comes in an economy where food inflation grew at rates below six percent in January 2016, compared to the same period last year. In addition, global wheat prices declined by 23pc in 2016 from 2015 prices, according to the United Nations Conference on Trade and Development. The price has now reached 204 dollars per ton.